🦢Black Swan Street Weekly Stock Market Summary (Oct. 2nd - Oct. 6th 2023)

Welcome to Black Swan Street!

Welcome back to Black Swan Street, where we dive into the financial ocean and bring you back the treasures - so you don’t have to get your feet wet.

It’s Friday. Let’s roll:

• Mortgage Applications Lower Than 2008📉

• Earnings Summary💰

• Headline Roundup🗞

• Next Week In The Stock Market🔮

Read time: 5 minutes

Mortgage Applications Lower Than 2008📉

Ladies and gentlemen, gather ‘round and brace yourselves to travel into the mystical realm of real estate…

The average 30-year fixed-rate mortgage reached 7.8% this week - the highest level since 2000.

If you’re picturing a bunch of bank executives in capes, cackling maniacally as they raise interest rates, you’re not alone. The incredibly sharp rise in mortgage rates has left prospective buyers shocked.

In fact, mortgage demand is at its lowest levels since 1995:

The MBA Purchase Index includes all mortgage applications for the purchase of a single-family home.

Why is this happening?

Two main reasons:

1. The Federal Reserve’s hawkish view and rising interest rates.

2. Mortgage rates and the 10-year yield are closely related. And the 10-year Treasury yield is reaching levels it hasn’t seen since 2007. Rising 10-year yield = Rising mortgage rates.

But this is only half the problem. There is also a lack of supply. Homeowners who have locked in low rates don’t want to sell and lose their current rate, leaving little inventory for those looking to buy.

Follow us on Twitter for real time analysis as this develops:

@BlackSwanStreet

Earnings Summary💰

In-Depth Earnings Dive:

McCormick & Co (MKC)

• Adj. EPS $0.65 inline with $0.65 estimate

• Sales $1.69B misses $1.70B estimate

• Sees FY23 Adj. EPS of $2.62-$2.67 vs $2.64 estimate

Constellation Brands (STZ)

• Adj. EPS $3.70 beats $3.36 estimate

• Sales $2.84B beats $2.82B estimate

• Raises FY24 Adj. EPS Outlook from $11.70-$12.00 to $12.00-$12.20 vs $11.70 estimate

Conagra Brands (CAG)

• Adj. EPS $0.66 beats $0.60 estimate

• Sales $2.90B misses $2.95B estimate

• Reaffirms FY24 Adj. EPS $2.70-$2.75 vs $2.72 estimate

Headline Roundup🗞

• Tesla reports Q3 deliveries of 435,059 and production of 430,488 vs expectations of 461,640 - TWTR

• Discover Financial agrees with FDIC to improve its consumer compliance and related corporate governance - YF

• Kellogg officially splits into two. Kellogg’s cereal business began trading on the NYSE as “WK Kellogg Co” under ticker symbol (KLG). Kellogg renamed to “Kellanova” and will still trade under ticker symbol (K) and will house snack brands like Pringles and Cheeze-Its - CNBC 

• UAW strike against Ford, GM, Stellantis cost U.S. economy nearly $4B so far - FB

• Banc of California and Rise Economy announce $4.1B community benefits plan - BW

• Eli Lilly to acquire POINT Biopharma to expand oncology capabilities. Lilly will commence a tender offer to acquire all outstanding shares of POINT for $12.50 per share in cash (~$1.4B in total) - PRN

• Wells Fargo plans to spend $175 million to expand its retail-banking presence in and around Chicago - BBG

• U.S. JOLTs Job Openings: 9.610M, from previous 8.80M, and above 8.920M forecast

• Beverage company, Molson Coors, authorizes $2B share buyback program over five years - BW

• Starbucks closing 7 downtown San Francisco stores - FB

• Intel plans to spin off its programmable chip unit into a standalone business and within three years, IPO - CNBC

• U.S. ADP Nonfarm Employment Change: 89k, from previous 180k, and below 153k forecast

• Rivian announces $1.5B convertible bond sale - RT

• Dell to add $5 billion to its share buybacks, also aims to grow quarterly dividend by 10% or more annually through 2028 - MW

• Metropolis Technologies to acquire SP Plus for $1.5B and intends take the firm private - BW

• U.S. Nonfarm Payrolls: 336k, from previous 227k, and above 170k forecast

• Exxon Mobil closing in on megadeal (worth ~$60B) with Pioneer Natural Resources - WSJ

Next Week in the Stock Market🔮

Earnings Calendar Next Week:

What the Swan is watching:

Tuesday: PepsiCo

Thursday: Delta Airlines, Walgreens, Domino’s Pizza, Fastenal

Friday: JPMorgan Chase, Citigroup, Wells Fargo, PNC Bank, UnitedHealth Group, BlackRock, Progressive

Economic Calendar Next Week:

The Swan’s Picks🦢

🔮Las Vegas’ newest $2.3 billion attraction is open: You’ve probably seen it before, the sphere. Well, It’s finally open. It was built by Madison Square Garden Entertainment and is a whopping 366 feet tall and 516 feet wide. So large in fact, you could fit the entire Statue of Liberty inside of it. It is also home to the world’s largest and highest-resolution LED screen.

🍺‘Woke-free’ beer company makes $500k in 12 hours: The company is ‘Ultra Right Beer Company’ and they released beer cans that featured former president Donald Trumps face on it. And man did they crush - no pun intended. The cans brought in half a million in sales in half a day.

🍸Oh Applebee’s you’ve done it again: Applebee’s is bringing back the Dollarita. As the name implies, the ‘Dollarita’ is a $1 margarita special. The deal is said to only be available through the end of October. So if you want some very mediocre margaritas, you better head over to Applebee’s.

⚽️The World Cup is heading to North Africa… and other places: That’s right. The 2030 World Cup will be jointly hosted by Morocco, Portugal, and Spain

💸Biden cancels another $9 billion of student debt: The Biden administration has approved debt relief for an additional 125,000 borrowers, totaling $9 billion. This announcement comes just a few short days after the federal student loan payments restarted after a three-year pause.

The Wrap-Up🔄

That’s all we got this week!

Thanks for tuning in to another edition of Black Swan Street.

Sorry for the shorter edition this week. I’m in the middle of mid-terms for graduate school. I’ve been swamped, but I still had to make sure I released a quality newsletter this week.

That being said, please let us know what you thought ⬇